Understanding Your First Home Buyer Budget
Saving for your first home can feel overwhelming, but with the right approach and a solid first home buyer budget, you'll be surprised how achievable it becomes. As a first home buyer in NSW, you have access to various government schemes and incentives that can significantly reduce the amount you need to save.
The first step is understanding exactly how much you need. While many people think they need a 20% deposit, there are low deposit options available that allow you to enter the property market sooner. With a 5% deposit or 10% deposit, you can purchase a home through government schemes like the First Home Guarantee Scheme or the Regional First Home Buyer Guarantee.
Creating Your First Home Buyer Checklist
Before you start saving, develop a comprehensive first home buyer checklist. This should include:
- Calculating your borrowing capacity
- Researching first home buyer eligibility criteria
- Understanding first home buyer stamp duty concessions in NSW
- Exploring first home owner grants (FHOG) available
- Determining your ideal deposit amount
- Reviewing your credit score and financial history
- Gathering documents needed for your first home loan application
Having this roadmap will keep you focused and motivated throughout your savings journey.
Smart Saving Strategies
Set Up a Dedicated Savings Account
Open a high-interest savings account specifically for your home deposit. Consider an offset account structure if you already have other loans, as this can help you save on interest while building your deposit. Look for accounts that offer interest rate discounts for regular deposits and no withdrawals.
Take Advantage of the First Home Super Saver Scheme
The First Home Super Saver Scheme (FHSSS) allows you to save up to $50,000 inside your superannuation fund. You can make voluntary concessional and non-concessional contributions, then withdraw these (plus earnings) when you're ready to buy your first home. The tax benefits can help your savings grow faster than a regular savings account.
Automate Your Savings
Set up automatic transfers from your everyday account to your savings account on payday. Treating your savings like a non-negotiable expense ensures consistency. Even starting with $200-$300 per fortnight can build substantial savings over time.
Ready to get started?
Book a chat with a Mortgage Broker at Personalised Finance today.
Understanding First Home Buyer Grants and Concessions
NSW offers several financial benefits for first home buyers:
First Home Owner Grant (FHOG): Currently $10,000 for new homes or substantially renovated homes where the purchase price or construction value doesn't exceed $600,000 in regional NSW or $800,000 in other areas.
Stamp Duty Concessions: First home buyers in NSW can access full exemptions or concessions on stamp duty for properties under certain price thresholds. This can save you tens of thousands of dollars.
First Home Loan Deposit Scheme: This government initiative helps eligible first home buyers purchase a property with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI). Places are limited and allocated annually, so it's worth checking your first home buyer eligibility early.
Reducing Your Expenses
Saving for a deposit often means making temporary lifestyle adjustments:
- Review subscription services and cancel what you don't use
- Cook at home more frequently rather than dining out
- Consider a side income to boost savings
- Negotiate bills like insurance, utilities, and phone plans
- Postpone major purchases until after you've bought your home
Remember, these sacrifices are temporary steps toward achieving homeownership.
Exploring Home Loan Options Early
Even while saving, it's valuable to understand the home loan options available to you. Familiarise yourself with:
Interest Rate Types: A fixed interest rate provides certainty with the same repayment amount for a set period, while a variable interest rate can fluctuate with market conditions. Some borrowers choose a split loan combining both.
Loan Features: Consider whether features like an offset account or redraw facility suit your financial management style. An offset account can reduce interest charges, while redraw allows you to access extra repayments if needed.
Getting Pre-Approval
Once you've saved enough for your deposit, consider getting pre-approval before you start seriously house hunting. Pre-approval gives you:
- A clear budget for your property search
- Confidence when making offers
- An understanding of your home loan application requirements
- A head start on the purchase process
Pre-approval typically lasts 3-6 months, giving you time to find the right property without pressure.
Accepting Gift Deposits
If family members offer to help with your deposit, this gift deposit needs to be properly documented for your first home loan application. Lenders require a signed gift letter confirming the money doesn't need to be repaid. This can be a legitimate way to reach your deposit goal faster.
Understanding Lenders Mortgage Insurance (LMI)
If you're borrowing more than 80% of the property value, you'll typically pay Lenders Mortgage Insurance (LMI). This protects the lender if you default on the loan. LMI can cost thousands of dollars, which is why schemes that waive this requirement are so valuable. However, if government scheme places aren't available, paying LMI might still be worthwhile to enter the market sooner rather than waiting years to save a larger deposit.
When You're Ready to Apply for a Home Loan
Once you've built your deposit and found a property, it's time to apply for a home loan. Working with an experienced mortgage broker can help you:
- Compare multiple lenders and products
- Access potentially lower interest rates
- Navigate first home buyer schemes
- Understand the full first home buyer budget including ongoing costs
- Complete your first home loan application correctly the first time
Buying your first home is one of life's major milestones, and having the right support makes the process much smoother.
Saving for your first home requires commitment and planning, but thousands of first home buyers across NSW achieve this goal every year. With government assistance, disciplined saving, and professional guidance, you'll be holding your keys sooner than you think.
Ready to take the next step toward buying your first home? The team at Personalised Finance specialises in helping first home buyers throughout NSW understand their options and secure the right home loan. Call one of our team or book an appointment at a time that works for you to discuss your first home buyer budget and explore the home loan options available to you.
